Thursday, 26 November 2015

Echo from Imperial College: Remove the licensing obstacle for Nigeria to enjoy stable power supply- OlawepoG

Gbenga Olawepo-Hashim
For Nigeria to enjoy a stable power supply, it must dismantle the delay in licensing of Independent Power Projects (IPPs( and the signing of Power Purchase Agreement (PPA) through an executive guideline for the industry that defines Standard Operating Procedures for agencies and institutions.

According to ‎Mr Gbenga Olawepo-Hashim, who spoke at the annual lecture of Nigerian Student Society, Imperial College, London, processing license applications and signing of PPA should not take more than 90-120 days, revealing that "currently it takes 2-3 years when in fact, a complete power plant could be delivered between 18 -24 months.‎"

Speaking on the topic: Nigeria: facilitating resilient and sustainable infrastructural development, he urged the Federal Government to "make Sovereign Guarantee available to all PPAs that the Nigeria Bulk Electricity Trading Company (NBET) concludes and with the requisite 90-120 days LC to ensure bankability of such agreements."

Olawepo asserts that when distribution companies and eligible customers are licensed, "they should be able to sign PPA with the Generating Companies (GENCOs) and IPPs for the supply of Power without the undue meddlesomeness of the Nigeria Electricity Regulation Commission (NERC). This is the provision of the Electricity Sector Reform Act, and this is what it should be."

He stressed the need for more attention to be paid to sanctioning operators particularly in the distribution sector, especially those who have not delivered on their terms of purchase of their network as the entire value chain depends on effectiveness at this level.

‎Emphasising the importance of IPP producers In the sector, he, however, described Nigeria as an important Nation not only on account of her oil wealth but the significance of the energy of her people, "whose creativity and resilient spirit of enterprise continues to assure her progress even in the face of seemingly hopeless situations."

His words: ‎"It is due to the hard-work and industry of the ordinary Nigerians- the nation’s greatest asset, that Nigeria attained a GDP rebased at $510 billion in 2013 exceeding that of South Africa to become the biggest African economy even in the face of her parlous infrastructure.

"The feat is the result of the toiling of small-scale   entrepreneurs, who continue to create value without adequate electricity, cottage food processors, without affordable financing, farmers without the scantest of state support; artisans, bold and imaginative businessmen and women, dynamic financial managers, young innovators creative artisans and hardworking professionals.

"Remarkably, Price Water Cooper predicts that the country’s economy will probably grow to be the 9th largest economy in the world by 2050. The basis for this has already been laid over the past ten years with the country recording 6-7% annual growth consistently. In 2015, even with the collapse in oil price - the country’s major export - the economy still managed to grow at 2.8% compared to 1.2% of South Africa; 1.5% in the Euro Zone;  -2.6% in Brazil and 2.0 % in the US last quarter. These occurred despite more than fifty per cent collapse in oil revenue and slowdown in government business due to the inauguration of a new government.


"Growth in the Nigeria Economy is expected to be sustained as the economy has acquired a resilience beyond oil and natural resource exploitation that accounts for only 14% of GDP as long as the political and security situation remains stable.

"Nigeria has also recorded a robust expansion of her middle class, which Standard Bank reported has grown by six-folds between the year 2000 and 2010.

"The Nigerian diaspora community is an integral part of the Nigeria growth story. In 2013, foreign remittances to Nigeria was a record $21billion USD.  This forms part of the incredible contributions of Nigerians abroad, innovators, small business operators and ordinary folks eking out a living for themselves in the hard-way, - picking up tough jobs that a lot of people in their host communities ignore.

"Brilliant people of Nigerian decent stand up daily to be counted as part of the positive pages of the rising Nigerian story. The Imafidon twins Paula and Peter broke the world mathematic record passing the Cambridge Advanced Level Math at age 8, the youngest ever to do so. Chinedu Echeruo, the founder of Hopstop.com purchased by Apple at a price of $1billion USD, is blazing the trail in the ICT world.

"Dr Victor Olalusi who scored 5.0 CGPA at the Faculty of Clinical Sciences at Russian National Medical University in 2013, arguably the first in the world to do so are among a growing list of sterling performers.

"Back home in 2012, four Nigerian teenage girls namely Duro Aina, Akindele Adeola, Faleke Oluwatoyin and Bello Eniola figured a way to generate electricity from urine to power a generator for six hours.

"Recently, 24-year-old Oluwatobi Olasunkanmi won the William Charnley Prize for the best First Class in Law at the University of Cambridge. Right here in this hall we have Mervin Azeta, a female Chemical Engineer who has just completed her Master’s degree here at Imperial with a distinction, having achieved a first class honour in her first degree from the University of Benin, Nigeria, and I know there are similar more stories of great achievers in this gathering today.

"This is the Nigerian spirit that turns out outstanding achievers from the harshest imaginable environment," he said, expressing optimism that ‎"in the next ten years if her hardworking people can enjoy the infrastructure support that their peers in comparable middle-income countries take for granted. I suspect this is one of the reasons why the ICNS has invited us to explore the topic.

"On Transportation infrastructure, while road transport remains widely in use with the countries road network expanding from 6000 km at independence to 197,000km in 2012 only about 18% of the roads are paved. The roads and bridges are in various states of disrepair; air and water transportation are below acceptable standards and our ports and railways services are in a near state of complete abandon.

He lamented the non-completion of any new greenfield port over the last four decades despite a rapidly expanding economy, quoting AFDP 2013 study that revealed that "of all the freight that arrived Nigerian port, only 0.2% throughput traveled by rail."

He continued: "The oil refineries are in an incredibly bad shape. Nigeria, the 5th largest producer of oil, has turned into a net importer of petroleum products due to the shameful state of gas and pipeline infrastructure. Hospitals and Educational facilities are in a state of decay crippled by the manacles of poor maintenance and underdevelopment.

"The reasons for the infrastructure decay are not far-fetched. They include; lack of adequate investment from both the public and the private sector, lack of adequate maintenance programme and capacity building issues.

"In order to upgrade the nation’s infrastructure for the purpose of supporting the desired economic growth target and socioeconomic development objectives, the AFDP forecasts Nigeria requires $350 billion USD CAPEX investment over a period of nine years. It also estimates that $100billion USD is required over the same period as OPEX investment.

‎As a way out, he said that once policy makers and implementers summon the will to take immediately far-reaching actions that are focused and sustained along the following lines, achievements will come in.

He advocated the reordering of government expenditure to allow for commitment of at least fifty per cent of government revenue to Capital Expenditure in the 2016 budget and with the aim of increasing to sixty per cent and seventy per cent in 2017 and 2018 budget cycle respectively.

"The Federal Government should embark on Contractor financed infrastructure projects based on internationally benchmarked pricing; in the construction of rail tracks, the supply of locomotives and coaches, and other critical infrastructure. Such selected projects must have the necessary projected cash –flow to pay back to qualify for approval.

"There should be an immediate bid process for the concession of two sites for the construction of two greenfield ports in areas with the natural port depths.

Immediate elimination of bureaucratic curtains, red tapes and elimination of duplication of regulatory approvals for private sector direct investment in infrastructural development as now common in the power sector. This is to be achieved by the instrumentality of a sectorial guideline that institutes a Standard Operating Procedure detailing the timeline for processing applications with a high-level audit system of the processes.

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